1. A record of each outstanding money transmission obligation sold.
2. A general ledger posted at least monthly containing all asset, liability, capital, income, and expense accounts.
3. Bank statements and bank reconciliation records.
4. Records of outstanding money transmission obligations.
5. Records of each money transmission obligation paid within the 3-year period.
6. A list of the last-known names and addresses of all the licensee’s authorized delegates.
7. Any other records the division requires to be maintained by order or rule.
(b) Upon written request of the division to inspect any record specified in par. (a), the licensee shall promptly make the record available to the division. A licensee shall maintain the records specified in par. (a) in a location and manner that ensures the licensee can make the records available to the division no later than 7 business days after the division’s written request.
217.08 Authorized delegates. (1) Before a licensee is authorized to conduct business through an authorized delegate or allows a person to act as the licensee’s authorized delegate, the licensee shall do all of the following:
(a) Adopt, and update as necessary, written policies and procedures reasonably designed to ensure that the licensee’s authorized delegates comply with applicable state and federal law.
(b) Conduct a reasonable risk-based background investigation sufficient for the licensee to determine whether the authorized delegate has complied and will likely comply with applicable state and federal law.
(c) Enter into a signed written agreement that does all of the following:
1. Appoints the authorized delegate for the licensee with the authority to conduct money transmission on behalf of the licensee.
2. Sets forth the nature and scope of the relationship between the licensee and the authorized delegate and the respective rights and responsibilities of the parties.
3. Requires the authorized delegate to fully comply with all applicable state and federal laws, rules, and regulations pertaining to money transmission, including relevant provisions of the Bank Secrecy Act and federal and state laws pertaining to money laundering.
4. Requires the authorized delegate to remit and handle money and monetary value in accordance with the terms of the agreement.
5. Imposes a trust for the benefit of the licensee on money and monetary value net of fees received for money transmission.
6. Requires the authorized delegate to prepare and maintain records as required by this chapter and applicable rules.
7. States the authorized delegate’s consent to examination or investigation by the division.
8. States that the licensee is subject to regulation by the division, and that, as part of that regulation, the division may suspend or revoke an authorized delegate designation or require the licensee to terminate an authorized delegate designation.
9. Acknowledges the authorized delegate’s receipt of the written policies and procedures required under par. (a).
(2) An authorized delegate of a licensee holds in trust for the benefit of the licensee all money net of fees received from money transmission. If any authorized delegate commingles any funds received from money transmission with any other funds or property owned or controlled by the authorized delegate, all commingled funds and other property shall be considered held in trust in favor of the licensee in an amount equal to the amount of money net of fees received from money transmission.
(3) An authorized delegate may not use a subdelegate to conduct money transmission on behalf of a licensee.
(4) A person shall not engage in the business of money transmission on behalf of a person not licensed under this chapter or not exempt pursuant to s. 217.03. A person violating this subsection shall be jointly and severally liable with the unlicensed and nonexempt person for engaging in the business of money transmission without a license.
(5) If a licensee’s license is suspended, revoked, surrendered, or expired, the licensee shall, within 5 business days, provide documentation to the division that the licensee has notified all applicable authorized delegates of the licensee of the suspension, revocation, surrender, or expiration of the license. Upon receiving notice of the suspension, revocation, surrender, or expiration of a license, an authorized delegate shall immediately cease to provide money transmission as an authorized delegate of the applicable licensee.
(6) The division may, by written order, suspend or revoke the designation of an authorized delegate if the division finds any of the following:
(a) The authorized delegate failed to comply with an order of the division, any provision of this chapter, any rule promulgated under this chapter, or any other state or federal law applicable to money transmission.
(b) The authorized delegate failed to cooperate with an investigation, examination, or other request for information by the division.
(c) The authorized delegate engaged in unsafe or unsound practices in connection with the business of money transmission.
(d) The authorized delegate made a material misstatement, or knowingly omitted a material fact, in an application for a license or in information furnished to the division or the nationwide multistate licensing system and registry.
(e) The authorized delegate engaged in any fraudulent or deceptive conduct or gross negligence relating to the business of money transmission.
(f) A federal or state administrative order has been entered against the authorized delegate for violation of any rule or regulation applicable to the conduct of the person’s money transmission business.
(g) The financial responsibility, character, reputation, experience, and general fitness of the authorized delegate indicate that it is not in the public interest to permit the applicant or licensee to provide money transmission in this state.
217.09 Timely transmission; refunds; receipts and other disclosures. (1) Timely transmission. A licensee shall forward all money received for transmission in accordance with the terms of the agreement between the licensee and the sender, unless the licensee has a reasonable belief, or a reasonable basis to believe, that the sender is a victim of fraud or that the transaction relates to a crime or violation of law, rule, or regulation. If a licensee fails to forward money received for transmission in accordance with this subsection, the licensee shall state the reason for the failure in response to any inquiries by the sender unless providing the response would violate applicable state or federal law.
(2) Refunds. (a) Except as provided in par. (b), a licensee shall refund to the sender any money received for transmission within 10 days of receipt of the sender’s written request for a refund.
(b) Paragraph (a) does not apply if any of the following circumstances exist:
1. The money was forwarded within 10 days of the date on which the money was received for transmission.
2. Instructions were given committing an equivalent amount of money to the person designated by the sender within 10 days of the date on which the money was received for transmission.
3. The agreement between the licensee and the sender instructs the licensee to forward the money at a time that is beyond 10 days of the date on which the money was received for transmission. If funds have not yet been forwarded in accordance with the terms of the agreement between the licensee and the sender, the licensee shall issue a refund in accordance with the other provisions of this section.
4. The refund request concerns a transaction that the licensee has not completed because the licensee has a reasonable belief, or a reasonable basis to believe, that the sender is a victim of fraud or that the transaction relates to a crime or violation of law, rule, or regulation.
5. The refund request does not include sufficient information to enable the licensee to identify the sender or, in the event the sender has multiple transactions outstanding, the particular transaction to be refunded.
6. The money received for transmission is subject to the federal remittance rule, 12 CFR 1005, subpart B.
7. The money was received for transmission pursuant to a written agreement between the licensee and payee to process payments for goods or services provided by the payee.
(3) Receipts. (a) Except as provided in par. (b), a licensee or its authorized delegate shall provide the sender a receipt for money received for transmission. The receipt shall be in English and in the language principally used by the licensee or authorized delegate to advertise, solicit, or negotiate transactions conducted in person, electronically, or by phone, if other than English, and shall include all the following information, as applicable:
1. The name of the sender.
2. The name of the designated recipient.
3. The date of the transaction.
4. The unique transaction or identification number.
5. The licensee’s name, business address, and customer service telephone number.
6. The amount of the transaction in U.S. dollars.
7. Any fee charged by the licensee to the sender for the transaction.
8. Any taxes collected by the licensee from the sender for the transaction.
(b) Paragraph (a) does not apply if any of the following circumstances exist:
1. The money received for transmission is subject to the federal remittance rule, 12 CFR 1005, subpart B.
2. The money received for transmission is not primarily for personal, family, or household purposes.
3. The money is received for transmission pursuant to a written agreement between the licensee and payee to process payments for goods or services provided by the payee.
217.10 Prudential standards. (1) Net worth. A licensee shall maintain at all times a tangible net worth in excess of the greater of $100,000 or the sum of the following: 3 percent of the licensee’s first $100,000,000 in total assets, plus 2 percent of any additional assets up to $1,000,000,000, plus 0.5 percent of any additional assets over $1,000,000,000. The division may exempt an applicant or licensee from this requirement, in whole or in part, if the division finds the exemption to be in the public interest.
(2) Surety bond. A licensee shall at all times maintain a surety bond or other form of security acceptable to the division. The minimum required amount of the security shall be the greater of $100,000 or an amount equal to 100 percent of the licensee’s average daily money transmission liability in this state calculated for the most recently completed 3-month period, up to $500,000. A licensee that maintains security of at least $500,000 is not required to calculate its average daily money transmission liability in this state.
(3) Permissible investments. (a) A licensee shall maintain at all times permissible investments that have a market value computed in accordance with U.S. generally accepted accounting principles of not less than the aggregate amount of all of the licensee’s outstanding money transmission obligations.
(b) The following are permissible investments for purposes of par. (a):
1. Cash, including demand deposits, savings deposits, and funds in such accounts held for the benefit of the licensee’s customers, maintained in a federally insured depository financial institution.
2. Cash equivalents, including automated clearing house items in transit to the licensee, automated clearing house items or international wires in transit to a payee, cash in transit via armored car, cash in smart safes, cash in licensee-owned locations, debit card or credit card-funded transmission receivables owed by any bank, and money market mutual funds rated “AAA” by S&P, or the equivalent from any eligible rating service.
3. Certificates of deposit or senior debt obligations of a federally insured depository financial institution.
4. An obligation of the United States or a commission, agency, or instrumentality thereof.
5. An obligation of a state or a governmental subdivision, agency, or instrumentality thereof.
6. An obligation that is guaranteed fully as to principal and interest by the United States.
7. The amount of the security provided under sub. (2) that exceeds the average daily money transmission liability in this state.
8. The full drawable amount of a standby letter of credit that meets all the following requirements:
a. It is irrevocable, unconditional, and unqualified.
b. It is issued by a federally insured depository financial institution; a foreign bank authorized under federal law to maintain a federal agency or federal branch office in a state; or a foreign bank that is authorized under the law of a state to maintain a branch that is regulated, supervised, and examined by federal or state authorities having regulatory authority over banks, credit unions, and trust companies if the foreign bank or its parent company bears an eligible rating.
c. It identifies the division or its agent as the stated beneficiary.
d. It states an issue date and expiration date.
e. It automatically extends for one year, without a written amendment, upon each expiration date unless the issuer of the letter of credit notifies the division at least 60 days prior to any expiration date that the irrevocable letter of credit will not be extended. Notice shall be provided by certified or registered mail or courier mail or other receipted means.
f. It provides that the issuer of the letter of credit will honor, at sight, a presentation made by the beneficiary to the issuer of the original letter of credit and any amendments thereto.
g. It provides that the issuer of the letter of credit will honor, at sight, a written statement by the beneficiary that a petition for bankruptcy, reorganization, receivership, or dissolution has been filed by or against the licensee; the licensee’s assets have been seized pursuant to an emergency order issued on the ground that the licensee is, or is at risk of becoming, insolvent; or the beneficiary has received notice of expiration or nonextension of a letter of credit and the licensee failed to demonstrate to the satisfaction of the beneficiary that the licensee will maintain the minimum permissible investments required in par. (a) upon the expiration or nonextension of the letter of credit.
h. It stipulates that the beneficiary may obtain funds up to the amount of the letter of credit no later than 7 days after presenting a written statement by the beneficiary that any of the events specified in subd. 8. g. has occurred.
i. It does not reference other agreements or provide for any security interest in the licensee.
9. Receivables payable to a licensee from its authorized delegates in the ordinary course of business that are less than 7 days old, subject to the following limitations:
a. Receivables payable to a licensee from its authorized delegates may not exceed 50 percent of the aggregate value of the licensee’s total permissible investments.
b. Receivables payable to a licensee from a single authorized delegate may not exceed 10 percent of the aggregate value of the licensee’s total permissible investments.
10. a. Subject to the limitations in subd. 10. b., a short-term investment of 6 months or less that bears an eligible rating; commercial paper that bears an eligible rating; a bill, note, bond, or debenture that bears an eligible rating; a U.S. tri-party repurchase agreement collateralized at 100 percent or more with federal government or agency securities, municipal bonds, or other securities that bear an eligible rating; a money market mutual fund rated less than “AAA” and equal to or higher than “A-” by S&P, or the equivalent from any other eligible rating service; or a mutual fund or other investment fund composed exclusively of the investments listed in subds. 1. to 6.
b. The investments specified in subd. 10. a. may not in the aggregate exceed 50 percent of the aggregate value of the licensee’s total permissible investments. No single category of investment under subd. 10. a. may exceed 20 percent of the aggregate value of the licensee’s total permissible investments. The division may limit the extent to which a specific investment maintained by a licensee within a class of permissible investments may be considered a permissible investment.
11. Cash, including demand deposits, savings deposits, and funds in such accounts held for the benefit of the licensee’s customers, maintained at a foreign depository institution, subject to the following limitations:
a. The licensee must have obtained at least a satisfactory rating in its most recent examination under this chapter.
b. The foreign depository institution must bear an eligible rating, be registered under the Foreign Account Tax Compliance Act, and not be located in a country that is subject to sanctions from the office of foreign assets control in the U.S. treasury department or designated a high-risk or noncooperative jurisdiction by the Financial Action Task Force established at the G7 summit in Paris on July 14, 1989.
c. Cash maintained at a foreign depository institution may not exceed 10 percent of the aggregate value of the licensee’s total permissible investments.
12. Any other investment authorized as a permissible investment by rule or written determination of the division.
(c) Permissible investments, even if commingled with other assets of the licensee, are held in trust for the benefit of the purchasers and holders of the licensee’s outstanding money transmission obligations on an equitable basis in the event of insolvency, the filing of a petition by or against the licensee for bankruptcy or reorganization, the filing of a petition by or against the licensee for receivership, the commencement of any other judicial or administrative proceeding for the licensee’s dissolution or reorganization, or an action by a creditor against the licensee who is not a beneficiary of the trust. Permissible investments held in trust pursuant to this section are not subject to attachment, levy of execution, or sequestration, except for a beneficiary of the trust. Any statutory trust established hereunder shall be terminated upon extinguishment of all the licensee’s outstanding money transmission obligations.
(d) Following the issuance of a notice of expiration or nonextension of a letter of credit under par. (b) 8. e., and no later than 15 days prior to the expiration date of the letter of credit, the licensee shall demonstrate to the satisfaction of the division that the licensee will continue to comply with sub. (1) after the letter of credit expires. If the licensee fails to do so, the division may draw on the letter of credit up to an amount necessary to meet the licensee’s requirements under sub. (1), which shall be offset against the licensee’s outstanding money transmission obligations. The drawn funds shall be held in trust by the division or its agent for the benefit of the purchasers and holders of the licensee’s outstanding money transmission obligations.
